MANILA, Philippines – Got questions on family finances, wealth building, and investing? Tune in to INVESTIPS to get your answers.
This week, financial planner Jenny Del Mundo delivers some practical advice for those who have just received their first paycheck.
Axl Ross asks: “How can I build my savings even if I’ve only started working?”
You know Axl, prior to working, your income was zero, and you were probably living off your parents’ income, right? So when that first pay check arrives, don’t rush into a spending spree just yet. Start allocating the right way.
Adopt the “save before you spend” technique. How does this work? Set aside 10-20 percent of your income, and let’s call that your forced savings. It would be better if you can enroll in an automatic deduction, or an auto-transfer with your bank.
Second, live within the remaining balance. A new job doesn’t always mean a new lifestyle just yet.
Third, save up to 6 times of your average monthly salary. Let’s call that your “emergency fund.”
And then you can go into your big splurge.
When it comes to savings, be sure to grow your money. Open a time deposit for your short-term needs. Invest in a managed fund like mutual funds or unit-linked insurance for your medium to long-term goals.
It’s also good to get life insurance at this stage, where premiums are less expensive while you’re young. Your life insurance policy ensures you can leave something behind for your parents, should anything happen to you. –Rappler.com
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